On the 20 July 2022, the Supreme Court in Harpur Trust v Brazel (2022) confirmed the decision previously reached by the Court of Appeal in 2019.
Whilst this was no real surprise in employment law terms, it may have left many scratching their heads at the now formalised implications of the judicial decision.
What was the crux of the case?
Ms Brazel was a music teacher and was employed on a part-year basis (i.e. during term-time). She was also working variable hours. The school had been calculating her entitlement to paid leave based on 12.07% of the hours worked. Why? Because a lot of legal and HR professionals were of the view that it was sensible for leave to be accrued based on the work carried out which, in fairness, is a logical approach to take.
What did the Supreme Court determine?
That it was not the correct approach and was not in line with the way in which the domestic legislation (i.e. The Working Time Regulations, derived from the EU Working Time Directive) was drafted in that it provides that part-year workers should retain the full benefit of the statutory minimum of 5.6 weeks of paid annual leave per year. Whilst 12.07% of hours worked does roughly equate to 5.6 weeks for a full-year worker (i.e. someone working 52 weeks minus 5.6 weeks of holiday = 46.4 weeks “actually worked”), it reduces that entitlement for part-year workers to reflect their reduction in working time across the year, meaning that a standard term-time worker is usually left with around 4.7 or 4.8 weeks of annual leave depending on the actual number of weeks worked.
What was the rationale behind the judgment?
Quite simply, UK law is clear in stating that 5.6 weeks of annual leave per annum is the statutory minimum for someone engaged under some form of continuous contractual commitment which spans a full year. This, of course, is to be distinguished from the scenario where an employee leaves part-way through the year, in which case the legislation quite clearly allows for the 5.6 weeks entitlement to be pro-rated to reflect the part of the year that was worked prior to termination (e.g. if a workers leaves after 6 months, they will have accrued 2.8 weeks of annual leave entitlement).
To better understand the position here, it may help to consider the concept of “work” in the wider sense. The current legislation does not focus on the individual being physically in the process of carrying out work. Instead, it focuses on the fact that there is a continuous contract between the parties, thus justifying the full entitlement for the year during which that employment relationship is maintained.
It is worth noting that if full-year employees receive a higher number of holidays (e.g. 7 weeks), part-year workers do not necessarily need to get the exact same as long as they receive the greater of either the proportionate amount compared to their full-year counterpart, or 5.6 weeks which is this irreducible minimum set down by the legislation for the full year.
Who does the decision apply to?
As mentioned, it applies to part-year workers who are under a continuous contractual commitment with the employer that spans a full year. It is therefore arguable that a casual worker who undertakes a series of ad-hoc assignments can be treated differently insofar as the legislative principles that allow for pro-rata entitlement at the end of the working relationship may apply, with each assignment viewed as a separate contract.
The situation is likely to be more complex for those who fall between these two stools, e.g. casual workers who are engaged by the same employer on a regular basis. Although they may be considered casual workers in law (employment status being another mercurial area of law that it is sensible to seek professional advice on), it could be difficult to argue that the series of assignments are separate contracts to which pro-rated holiday entitlement applies. In such circumstances, it may be better to err on the side of caution and provide the full 5.6 weeks of statutory holiday entitlement.
Is this the EU influencing UK law again?
Those who are au fait with recent holiday pay case law would be forgiven for assuming that this situation has arisen because EU decisions are once again impacting on UK employment law. However, that is not the case in this instance. Rather, it is the way our domestic legislation is written that formed the basis of this judgment.
Can holiday pay reflect weeks that have not been worked?
No. The rules regarding calculating the pay are clear that if the worker receives a regular weekly wage, that is what they should receive as holiday pay. If such pay does need to be based on an average, that average needs to be over a 52-week reference period and must only include weeks in which workers carried out work for which they were remunerated. As such, the additional weeks of unpaid leave that term-time workers benefit from would not dilute the holiday pay they are entitled to.
Is the situation likely to change?
No. Whilst the Supreme Court acknowledged that the decision meant that part-year workers were arguably treated more favourably than full-year workers, 5.6 weeks’ annual leave being the statutory minimum entitlement overrode any concerns it may have had in this regard. As to how employers can prevent this causing resentment on the part of full-year workers, increasing their holiday entitlement may be an option as long as term-time workers still get a proportionate entitlement (if above 5.6 weeks), although costs could render this prohibitive.
For now, it looks like the current position is here to stay and therefore it would be advisable for employers to review their existing holiday policies if they engage workers on a part-year basis.
This is a complex area of law and there may be other HR / Employment Law implications to consider. Therefore, employers who are unclear about their duties and responsibilities should seek professional advice from the outset. Our team is on hand to provide the required support on this and any other HR / Employment Law matter, so please contact us on 01942 727200 or at email@example.com